Mandatory State Support for Local Currency to Be Discussed at Next Month's Plenary Session

Bill Scrapped Last Year by Presidential Veto
"Revitalizing the Local Economy" vs. "Fiscal Burden"
Expected to Pass Today or in Early August

The "Local Currency Act," which mandates state financial support for local gift certificates, is returning to the plenary session just 10 months after it was scrapped by a presidential veto. If the bill passes, the issuance and management of local gift certificates by local governments are expected to expand further.

According to the National Assembly on the 23rd, the bill to promote the use of local gift certificates, which includes these provisions, passed the Legislation and Judiciary Committee's plenary session the previous day. The bill is expected to be submitted to the plenary session scheduled for August 4.

Citizens shopping at Jungbu Market in Seoul. 2021.08.30 Photo by Moon Honam

The main point of the Local Currency Act is to change the state's financial input for issuing local gift certificates from "discretionary" to "mandatory." In addition, the Ministry of the Interior and Safety will be required to establish a basic plan for promoting local gift certificates every five years and to conduct fact-finding surveys.

The Yoon Suk-yeol administration has opposed this bill, citing concerns about infringement on the autonomy of local governments and the government's budgetary authority. Although the bill passed the plenary session last year under the leadership of the Democratic Party, it was scrapped when former President Yoon exercised his veto. The People Power Party also opposed the bill during the recent committee review, citing excessive fiscal burden on the government as the reason.

The important change is the shift in the Ministry of the Interior and Safety's position. Under the previous administration, the ministry expressed reluctance toward the bill due to concerns about budgetary authority, but this time it changed its stance, citing the inclusion of a proviso. Kim Minjae, Vice Minister of the Interior and Safety, stated at the plenary session of the Public Administration and Security Committee on the 10th, "Unlike the previous bill, the revised version includes a proviso allowing the ministry to adjust and reflect the financial capacity of local governments," adding, "Therefore, the side effects of making (financial support) mandatory can be resolved." He also said, "Given the current difficult economic situation, the government believes it cannot leave this entirely to local governments."

State financial support for local gift certificates began as a pilot program in 2018. During the COVID-19 response in 2020, both the amount of state support and the scale of issuance increased significantly, but have since continued to decline. State support was 1.3522 trillion won in 2021, 705 billion won in 2022, 352.2 billion won in 2023, and 299.8 billion won in 2024. When the Yoon Suk-yeol administration announced its first budget proposal this year, it sparked controversy by cutting the entire budget for local gift certificates.

Most local governments agree on the need for state financial support for local gift certificates. Last year, the office of Democratic Party lawmaker Kim Jeongho surveyed all 17 metropolitan and provincial governments about their views on the complete elimination of state budget support for local gift certificates. Twelve local governments either opposed the reduction or said state support was necessary. Notably, Daegu, Gyeongnam, Chungbuk, Gangwon, Sejong, Ulsan, and Busan?regions led by People Power Party mayors or governors?also responded that state support was necessary.

This content was produced with the assistance of AI translation services.